Target 3Q Profit Rises 16 Percent

MINNEAPOLIS (AP) -- Discount retailer Target Corp. said Tuesday its third-quarter profit rose 16 percent, beating analyst expectations as its sales rose 11 percent.

The nation's second largest discount chain after Wal-Mart Stores Inc. said it earned $506 million, or 59 cents per shares, up from $435 million, or 49 cents per share, during the same period last year.

Revenue rose to $13.57 billion from $12.21 billion during the same period last year. Target attributed the growth to new stores, a 4.6 percent sales rise at stores open at least a year, and credit card revenue.

Analysts surveyed by Thomson Financial were expecting 55 cents per share on revenue of $13.59 billion.

Net charge card revenue jumped 20.7 percent to $414 million. Target cards contributed $176 million in pre-tax earnings for the quarter, up $68 million, or almost 63 percent, from the same period last year.

Chief financial officer Doug Scovanner said on a conference call that Target's same-store sales have risen 4.8 percent for the year so far, and predicted its fourth-quarter same-store sales would be about the same. He said Target expects to earn $3.17 per share for the full year. Analysts are expecting $3.13.

Its report came as bigger rival Wal-Mart reported its third-quarter earnings rose 11.5 percent and promised its most aggressive holiday discounts ever to fuel year-end business. Target President Gregg Steinhafel said that's no different than what they've seen in previous years.

"We have experienced this competitive landscape over the last couple of years and really haven't seen any meaningful change to what we've seen in the past," he said.

Steinhafel said Target doesn't respond to Wal-Mart's advertised discounts when they are limited time, limited quantity offers. On long-running discounts, he said Target has often matched those before Wal-Mart advertises them in its circulars, he said.

Steinhafel also said Target was let down by smaller-than-expected shipments of Sony's new PlayStation 3 gaming console.

"We were led to believe we were going to be getting limited, but reasonable allocations and those allocations have come in less than that," he said.

The new Nintendo Wii is better. "Those allocations and quantities seem reasonably more healthy and appropriate for the holiday season. It still will be in short supply, but we will have significantly more product in Nintendo than we will have on Sony PS3," he said.

For the first nine months of the year, Target said it earned $1.67 billion, or $1.92 per share, up from $1.47 billion, or $1.65 per share during the same period a year ago. Revenue rose to $39.78 billion, up 11.5 percent from $35.67 billion a year earlier.

"We are pleased with our third quarter and year-to-date results and we are optimistic about our outlook for the fourth quarter," Chairman and Chief Executive Bob Ulrich said. "We remain confident in our strategy and believe that Target will continue to deliver strong profits and consistent growth well into the future."

Target shares rose 36 cents to $58.12 in late morning trading on the New York Stock Exchange.

On the Net:

Target Corp.: http://www.target.com

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